One of the principal bureaus of this department, in respect to the amount of expenditure and the magnitude of operations, as well as their influence upon military movements, is that of the quartermaster general. His able and elaborate report will be found worthy of your special observation. It presents a general statement of the operations of the department under his charge during the fiscal year. The clothing and equipage of the army; all that relates to its shelter in camp, in barracks, or on the march; the organization, equipment, and care of the baggage and supply trains; the purchase and charter of transports; the transportation of troops and supplies of all kinds; the repair and reconstruction of bridges, railroads, and common roads; the supply of forage for the army, of horses for the cavalry and artillery, of harness, except for the cavalry and artillery, of wagons, ambulances, hospital transport carts, and all he vehicles of the trains, except artillery carriages and caissons; the upply of labor other than that of troops; the payment of soldiers on extra duty; the erection of barracks, hospitals, and stables; the supply of tents; the care of refugees and prisoners; and generally all the expenses attending the operations and movements of an army not specifically assigned to some other department, fall within the duties of the quartermaster's department. The extent of the issues of some of the most important materials of war are set forth in tables attached to the report. A full statement of the expenditures of the fiscal year is given, and it will be seen that, while the army is reported to have been successfully and promptly furnished with all the supplies which it is the duty of the quartermaster's department to provide, the department has not had at its command facilities for completing, as promptly as the interest of the government and of the officer, requires the examination of the voluminous accounts of its disbursing agents.

The magnitude of the operations for the supply of the army are set forth in the report, with remarks upon the means of reducing expenditures, and providing for a more speedy settlement of accounts, and a more strict accountability for public money and property.

It will be seen that the quartermaster's department, upon which, under the law of 17th July, providing for the employment of colored persons, the charge of such persons is chiefly imposed, has not found. itself burdened with their care, but that it has, on the contrary, derived valuable aid from their labor, and, in a considerable portion of its field of operations, has thus far suffered from a scant rather than from too great a supply of such labor. In Louisiana, where at one time there were apprehensions of embarrassment from the number of refugees, the reserve of a tract of rich land along the railroad to Berwick's bay opens up a territory in which many thousands can be profitably employed, if placed under proper regulation and control. At Port Royal such persons have been extensively employed in the work of the quartermaster's department, and in cultivating some thousands of acres of the sea islands of the coast, the products of which are used in the support of themselves and families. In the operations of the army on the James river, and upon the Potomac, in the fortifications of Washington, and as laborers, teamsters,

ostlers, in landing and shipping stores, they have been of great service; and the demand for their labor has exceeded the supply available.

The successful movement of the various expeditions by sea, the transportation of such large bodies of troops, and their regular supply at distant points of the coast, afford striking proofs of the greatness of the military resources of the nation. These movements have been upon a scale of great magnitude. The collection of the vast armies which have been raised, and their transport to the field of operations in so brief a period, would not have been possible but for the extent of our system of steam transport by railroad, river, and sea.

It has not been found necessary to exercise within the loyal States the power conferred upon the President by law, to take actual military possession of the railroads of the country. The various companies met in convention in this city, united in proposing a uniform tariff for government transportation, which appears to be just and equitable, and they have performed all the services required of them by the department with a promptness, efficiency, and cheerfulness which do honor to the patriotism of their managers.

Upon the railroads within the sphere of active hostilities the war has borne with crushing severity. Some-as the Baltimore and Ohio. railroad, the Louisville and Nashville railroad, and the Missouri railroads-have with great energy repaired their bridges, restored their tracks and replaced their rolling stock at their own expense. Others, abandoned by their disloyal owners and managers, have been taken possession of, and repaired, stocked, and managed by the quartermaster's department. These works have involved great expenditures; but they were indispensable to the supply of the army, and less costly than the preparation, if that had been possible, of any other sufficient means of transportation.

The quartermaster's department constructed, during the fiscal year, a fleet of iron-clad gunboats and of steam rams, which was officered and manned by the Navy Department and the War Department conjointly, and which has proved most efficient as an aid in the military operations which restored to the government the control over the greater part of the western rivers. Under the law of 16th July last the gunboat fleet has been entirely transferred to the Navy Department. The fleet of steam rams still remains in charge of this department.

Your attention is invited to the increase of the force in the engineer, ordnance, and quartermaster's departments, proposed by a bill which passed the House of Representatives on the 9th of July last, and which is among the unfinished business of the last session. It is believed that, if it becomes a law, the efficiency and usefulness of these several important departments of the army will be increased. The necessity of providing more room for the records and examining officers of the quartermaster's bureau, by the extension of Winder's -building, is also respectfully suggested to your attention.

The commissary of subsistence reports that the armies throughout our extensive territory have been supplied with good and wholesome subsistence generally by advertisement for bids in the cities of Boston,

New York, Philadelphia, Cincinnati, Louisville, Baltimore, St. Louis, and San Francisco. Fresh beef has generally been supplied to our armies in the field on the hoof, and in larger proportion of the ration to marching columns, to lessen, as far as possible, the quantity of transportation required. The troops on the coast of the Carolinas and at the Gulf posts, including New Orleans, have received their fresh beef. by shipment from New York; it is hoped that during the coming year it may be procured from Texas.

In addition to the troops, subsistence has been furnished to all political prisoners and prisoners of war, to a large number of contrabands, and to the suffering Union inhabitants found in the march of our armies in the Confederate States. In a late report of the generalin-chief to this department, it is said that no armies of the world are so well supplied as the armies of the United States.

The ordnance bureau, as appears from the report of its chief, has displayed a vigor and activity unsurpassed by any other department. Notwithstanding the extraordinary demand occasioned by the new levies and enormous loss of arms by the casualties of war, and, in some instances, by the misconduct of officers and men, this bureau has supplied every call, and has been able to arm over four hundred. thousand new troops suddenly called into the field. The first class of arms has been apportioned, among the troops of the respective States, and just equality of distribution has been the rule of the department. A great diversity of opinion prevails in respect to arms, and often with little reason. The department has aimed, as far as possible, to gratify the choice of every one, and, where that could not be done, the troops have in general readily acquiesced in the necessity of the case, relying on the department for exchange when it should be able to make one. You will perceive, by the report as to the production of our armories, that the time is not far distant when the government will be able to place, from its own manufactories, the best arm in the hands of every soldier. The report also shows what provision has been made for supplies of gunpowder, saltpetre, materials, and munitions of war of every description.

Every means the country affords has been put forth to complete the armaments of our forts and fortifications for the defence of harbors and coasts, as is shown by the report of this bureau. These details are, for obvious reasons, not now stated, and the legislation required by this branch of the service will, by your direction, be communicated to the appropriate committees.

In general terms, it may be stated that the issues by the ordnance department include 1,926 field and siege, and 1,206 fortification cannon; 7,294 gun-carriages, caissons, mortar-beds, travelling forges, and battery wagons; 1,276,686 small arms; 987,291 sets of equipments and accoutrements; and 213,991, 127 rounds of ammunition for artillery and small arms--still leaving large supplies of ordnance stores at the arsenals and depots. The breaking out of the rebellion found us with insufficient supplies for the forces thereby rendered necessary, and without the means of their immediate procurement from our public arsenals and the private manufactories fitted and

ready for such work. The policy of the department to procure all such supplies of home manufacture could not be rigidly followed, and recourse was had to purchases and importations from abroad, in order to meet pressing requirements. The vast demand suddenly springing up, without any immediate increase of the supply, led to speculations and exorbitant prices. On a report from the ordnance bureau in respect to outstanding contracts for arms, I appointed a commission to investigate these matters, and their report is herewith submitted. The measures which have been adopted to procure such supplies, by increasing the capacity of our public arsenals and developing the private sources of home manufacture, will soon enable this department to obtain supplies of this description, independently of importations from abroad, and at fair and reasonable rates.

The subject of arming the fortifications, particularly those defending the harbors of our principal Atlantic ports, has received special attention, and all the means at the disposal of the department have been applied to that end, so far as was possible and consistent with meeting other imperative requirements. In consequence of the introduction into naval warfare of iron-clad vessels, comparatively safe from the effects of such batteries as had hitherto been sufficient to guard effectually against the passage of hostile vessels, it became necessary to provide heavier and more powerful ordnance. The whole system of such armament was carefully revised and amended by a board of the most experienced and competent officers, and measures have been taken to carry their recommendations into effect.

I desire to call special attention to the necessity of providing additional means for the storage and preservation of ordnance supplies, as recommended in the report of the chief of ordnance. When it is considered that we have now no more facilities for this purpose than when our military organization included an army of not over eighteen thousand men, the absolute necessity of a far more ample provision of such facilities will be manifest. The plan for this purpose, as stated in the report from the ordnance bureau, is believed to be the best that can be devised, and by no means too extensive in its provisions to meet our absolute wants, now and for the future; and I commend it for favorable consideration, and for such legislation as may be necessary. I concur also with the chief of ordnance in his remarks relative to the onerous duties, considering its present limited number of officers, which have devolved upon that branch of the service, and to the industry, zeal, and fidelity with which those duties have been discharged. They are deserving of the measures suggested for their recognition and reward.

An act of the last session of Congress provided for the establishment of armories at Columbus, Indianapolis, and Rock Island. By order of this department the selection of proper sites was intrusted to Brigadier General Buckingham, whose report, approved by the chief of ordnance, is herewith submitted. Measures to procure the needed State legislation and the approval of title will be promptly taken.

During the recess of Congress the necessities of the service re

quired the old penitentiary of this District for the use of the arsenal, and, by your order, the convicts were removed to the State of New York, and the penitentiary buildings devoted to the purposes of the arsenal.

The attention of the department has been earnestly directed to the forts and fortifications for coast and harbor defence. A personal inspection of these important works has been made by General Totten, the distinguished chief of engineers. The grants made by Congress for fortifications at its last session amounted to $5,535,000 for permanent works, and $750,000 for temporary works. The chief of engineers reports that these sums admitted of very material progress being made at most of the important forts now in process of construction. This has been realized in a number of instances, and in all decided advancement has been effected. Great difficulties have been experienced in obtaining supplies of materials from the quarries, stone yards, &c., owing to the demands made by the war upon the classes usually employed in this kind of work. Similar trouble has been encountered in procuring transportation for materials.

Much has been done in advancing the state of readiness of our fortifications, in the principal commercial harbors, for service, in preparing for additional guns, in providing for the reception of armament of very large calibres in the existing batteries, and in placing all in effective condition for defence. Like measures have been observed with reference to naval stations and our frontiers generally.

A report by the board of visitors in respect to the condition of the Military Academy at West Point is submitted with the report of the chief of engineers.

The officers of the corps of topographical engineers, as appears by the report of its chief, have been almost exclusively on duty with armies in the field, engaged in surveys and reconnoissances connected with their movements; in the collection of topographical and statistical information; and in the construction of field works, batteries, intrenchments, block-houses, bridges, and other like duties.

The survey of the northern and northwestern lakes has been continued during the year-principally in the vicinity of Green bay and the Fox islands. The estimate for continuing the survey is $106,879 48, differing but little in amount from the last estimate.

The lake-harbor works are thirty-four in number. For want of appropriations by Congress, no work has been done at any of them during the present year, with the exception of the St. Clair lighthouse and beacon, and at Oswego harbor, New York.

The general estimate for the completion of each harbor work, founded upon previous inspections, will be found in Appendix No. 2 of the report of this bureau.

Claims for arrearages for harbors, rivers, roads, &c., amounting to $15,000, are found on the records of the bureau. The recommendation of the previous annual reports for an appropriation for their payment, on the approval of the War Department and adjustment by the treasury, is renewed.

The bridging and repairs of the military and emigrant wagon road